First Solar ANNUAL REPORT About First Solar

First Solar is a leading global provider of comprehensive photovoltaic (PV) solar energy solutions. Our vertically integrated power plant offerings diversify the energy portfolio and reduce the impact of fuel-price volatility while delivering an economically attractive alternative or complement to fossil fuel electricity generation. By integrating technologies and expertise across the entire solar value chain, First Solar delivers bankable PV energy solutions that can maximize the value of our customers’ PV investment while minimizing their risk. With over 10 gigawatts installed worldwide, First Solar has developed, financed, engineered, constructed, and operated some of the world’s largest and most successful PV power plants in existence, establishing the company as the partner of choice for customers globally. 2014 marked a transition year for First Solar and the broader solar power S industry. In the United States and in markets across the world, solar power is at an inflection point. No longer is solar power viewed only as a source of Financial clean energy, but it is now gaining broad acceptance across a wide spectrum of Performance energy providers as an affordable and reliable source of power. Utilities and In early 2014 we held an Analyst other power providers increasingly are Day where we established earnings LDER viewing solar as a critical component and operating cash flow targets of a balanced and economical energy that would enable growth and value creation. I’m pleased to say that we O portfolio. First Solar stands at the forefront of this evolution as a leading exceeded those financial targets provider of integrated solar power plant through strong execution. Our 2014 solutions. With strong 2014 financial DILUTED EARNINGS PER SHARE OF results, accelerating technology $3.91 AND OPERATING CASH FLOW improvements and an expanding global OF $681 MILLION, which were both presence I am optimistic about First significantly above the high end of Solar’s ability to continue to play a our guidance range. We continued defining role in this ongoing evolution to maintain the strongest balance while at the same time creating lasting sheet in the solar industry with an value for our shareholders. ending cash balance of $2.0 BILLION AND A NET CASH POSITION OF HAREH $1.8 BILLION. First Solar’s financial strength continues to differentiate S the company from competitors and enables us to continue to invest in our long-term strategic objectives. R OU

TO JAMES HUGHES CEO

FIRST SOLAR | ANNUAL REPORT 2014 Technology and Products

First Solar’s cadmium-telluride (CdTe) technology continues to be a key differentiator between our company and other solar manufacturers. In February 2015 we announced a new world record solar cell conversion efficiency of 21.5% which was certified at Newport Lab and documented in the U.S. Department of Energy’s NREL “Best Research Cell Efficiencies” reference chart. This new record now exceeds the multicrystalline silicon record research cell efficiency. More impressive is the fact that this is the eighth substantial update to CdTe record efficiency since 2011. Our world-class research and development team is sustaining our rapid rate of improvement which positions First Solar to compete even more effectively.

The results of our record cell efficiencies are evident in the ongoing improvements to our manufacturing fleet average efficiency. In the fourth quarter of 2014 our full-fleet averaged 14.4% conversion efficiency compared to an average of 13.4% during the same period in 2013. This 100 basis point improvement in our efficiency demonstrates our success is not limited to the laboratory. Our best line efficiency also improved significantly from the prior year and averaged 14.8% efficiency in the fourth quarter of 2014.

FIRST SOLAR | ANNUAL REPORT 2013

FIRST SOLAR | ANNUAL REPORT 2014 Perhaps most remarkable of all is the improvement our lead line has achieved since the beginning of 2015. Our four lead lines running our latest technology averaged 15.8% efficiency for the month of February. These results demonstrate the tremendous pace of innovation and the potential of our CdTe technology in Encouraged by market demand in late 2014 we both the lab and factory. announced plans to increase our manufacturing capacity. In Malaysia we restarted four idle lines that In addition to setting new records for conversion will add over 360 megawatts of capacity in 2015. In efficiency improvements our modules have also reached Ohio we have deployed stored equipment that will add new milestones for quality and reliability. Our production two additional lines and approximately 100 megawatts PV modules achieved Atlas 25+® certification following of capacity for 2015. a rigorous series of long-term combined-stress environmental exposure tests. This test represents the Recently we also manufactured the first production cells most stringent standards available and achieving this of our TetraSun product. With initial cell efficiencies of certification is a tremendous accomplishment. 20.5% we are encouraged by the performance of this technology and production levels will ramp in 2015 based on market demand.

FIRST SOLAR | ANNUAL REPORT 2014 Global Presence

First Solar celebrated a major milestone in early 2015 as over 10 gigawatts of our modules have been installed globally. This achievement highlights First Solar’s expanding global reach and the increasing demand for solar energy. Despite completing two of the largest solar projects in the world our pace of construction continues. In North America remained our largest market in the past 2014 we began construction of the McCoy, Moapa, year both in terms of projects constructed and new Silver State South and Stateline solar projects. These project bookings. We reached major project construction four projects represent a combined 1,050 MWac of milestones as both the Desert Sunlight and Topaz solar capacity and reinforce First Solar’s position as a projects, two of the largest solar power plants in the preeminent developer and provider of EPC services in world, achieved substantial completion. Taken together the utility-scale solar market. the two projects are capable of providing enough clean energy to power over 320,000 average California New project bookings in North America were strong this homes. On the strength of constructing these projects past year and reflected increasing diversity across the along with others, First Solar was once again in 2014 country. In the Southeastern United States we booked recognized as the top solar Engineering, Procurement almost 700MWdc of projects. This is an emerging and Construction (EPC) Company by IHS Research, region for solar power and highlights its broadening highlighting the ongoing value we provide to customers acceptance. The largest of the projects booked in this as an integrated solution provider. region include a module supply agreement with Strata Solar for 188MWdc in North Carolina and an EPC agreement to construct the 130MWac Taylor project in Georgia for Southern Company.

FIRST SOLAR | ANNUAL REPORT 2014 We added new projects to our advanced stage systems In California we signed a pipeline in North America with the addition of the Tribal power purchase agreement Solar project (310MWac), Imperial Energy Center West project (150MWac) and various other projects with Apple to supply in California totaling over 300MWac. 130MWac of solar power from the California Flats project in Monterey County. This represents the largest agreement in the industry Lastly in North America we announced our entry into the to provide solar power to community solar market in late 2014 with a strategic investment in Clean Energy Collective (CEC). CEC is the a commercial end user. nation’s leading developer of community solar, and this The power generated under strategic partnership allows us to develop and market the 25 year PPA will supply community solar offerings to residential customers and businesses directly on behalf of client utilities. all of Apple’s operations Community solar is not only a more cost effective solution in California, including its for many customers, but it also significantly expands offices, Newark data center consumers’ access to solar electricity. This allows any power consumer, including those who live in multi-tenant and Apple Retail stores. buildings, rent, or whose rooftops cannot accommodate This deal signals the solar panels, to access solar power. This strategic growing importance of partnership with CEC allows First Solar to play to the strength of our proven utility-scale capabilities, while affordable, clean energy to leveraging the expertise of a leading community solar commercial customers. program operator. We are excited by the prospects of this new partnership and ability that it provides for many more consumers to benefit from solar power.

FIRST SOLAR | ANNUAL REPORT 2014 We have also made significant progress in international markets. In 2014 we began construction on our first PV solar power plant in Chile, the 141MWac Luz del Norte solar project. Located in the Atacama Desert, which benefits from some of the best solar irradiance on the earth, the Luz del Norte project will be the largest solar power plant in Latin America when completed.

In the United Kingdom as part of our joint venture agreement with Belectric we provided modules to the 46MWdc Landmead solar project. As the largest project in the UK the project is capable of powering 14,000 average size homes and is another component in helping the country reach its energy security goals.

In Australia we broke ground on the 53MWac Broken Hill solar project which is being constructed for AGL Energy. Combined with the 102MWac Nyngan In the Middle East we marked a milestone with the start of solar project, which began construction construction on the 53MWac Shams Ma’an project in Jordan. First in early 2014, the projects once Solar will construct the project, which will be the largest solar project completed in late 2015 will meet the in the Middle East once completed, under an EPC agreement and energy needs of over 50,000 average provide operations and maintenance services. With excellent solar New South Wales homes and will be the resources and a need for affordable electricity, the Middle East two largest solar power plants in the remains a promising solar market. country. In 2014 we also took our first step into the diesel-PV hybrid solution The solar market in India experienced a recovery in 2014 as regulatory market with the construction of the policy solidified. We achieved a milestone by signing agreements for 1.7MW Weipa solar project for Rio Tinto 145MWac of self-developed projects from 2014 to early 2015. During in Queensland. The project will generate the same time period we have signed contracts for over 250MWdc power to meet 20 percent of the mine’s of module only volume. India has tremendous ambitions for solar daytime electricity demand and save the power installations over the next several years, and underscoring owner money by reducing the amount of our commitment to this market, First Solar has announced a goal to diesel consumed. develop 5 gigawatts of projects by 2019.

FIRST SOLAR | ANNUAL REPORT 2014 Conclusion

First Solar continues to position itself as a leader in the global solar industry. As global power markets increasingly appreciate the affordable and reliable nature of solar power, First Solar is well positioned as a trusted energy provider. Our results this past year have demonstrated tremendous progress. Our financial results in 2014 demonstrate the strength of our execution, and with nearly $2 billion of cash on the balance sheet, we are well positioned to invest in the future. Our technology has made great strides forward this past year with a new record cell conversion efficiency and lines that are producing modules at 15.8% efficiency. We recorded excellent bookings with 2.5 gigawatts of volume contracted in 2014 across multiple geographies. As a company we remain focused on our main objectives of developing new sustainable markets, continuing to establish strategic partnerships and providing comprehensive customer-oriented solutions. As we execute on this strategy we are focused on creating long-term success and enduring value for our shareholders.

Our financial results in 2014 demonstrate the strength of our execution, and with nearly $2 billion of cash on the balance sheet, we are well positioned to invest in the future.

FIRST SOLAR | ANNUAL REPORT 2014 2014 Financial Results

Net Sales

$3,500 3,369 3,309 3,392 $3,000 2,766 $2,500 2,564

$2,000 2,066

Millions $1,500 1,246 $1,000

$500 504 135 $0 2006 2007 2008 2009 2010 2011 2012 2013 2014

Cash & Market Securities vs. Debt $2,200 Total Cash 1,991 Total Debt $1,700 1,764

$1,200 1,114

1,114 1,004 $700 822 788 670 Millions $200 308

-$300 -81 -217 -108 -198 -175 -237 -223 -563 -$800 -664 2006 2007 2008 2009 2010 2011 2012 2013 2014

Average Module Conversion Efficiency 15.0%

14.0% 14.0% 13.0% 13.2%

12.0% 12.6% 11.9% 11.0% 11.3% 11.0% 10.7% Conversion Percentage 10.0% 10.4% 9.5% 9.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark one) Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 or ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-33156

First Solar, Inc. (Exact name of registrant as specified in its charter) Delaware 20-4623678 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 350 West Washington Street, Suite 600 Tempe, Arizona 85281 (Address of principal executive offices, including zip code) (602) 414-9300 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common stock, $0.001 par value The NASDAQ Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Í No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No Í Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes Í No ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes Í No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Í Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No Í The aggregate market value of the registrant’s common stock, $0.001 par value per share, held by non-affiliates of the registrant on June 30, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $4.9 billion (based on the closing sales price of the registrant’s common stock on that date). As of February 20, 2015, 100,291,843 shares of the registrant’s common stock, $0.001 par value per share, were issued and outstanding. DOCUMENTS INCORPORATED BY REFERENCE The information required by Part III of this Annual Report on Form 10-K, to the extent not set forth herein, is incorporated by reference from the registrant’s definitive proxy statement relating to the Annual Meeting of Shareholders to be held in 2015, which will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Annual Report on Form 10-K relates. FIRST SOLAR, INC. AND SUBSIDIARIES FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014 TABLE OF CONTENTS

Page PART I Item 1: Business ...... 3 Executive Officers of the Registrant ...... 23 Item 1A: Risk Factors ...... 24 Item 1B: Unresolved Staff Comments ...... 47 Item 2: Properties ...... 48 Item 3: Legal Proceedings ...... 48 Item 4: Mine Safety Disclosures ...... 48 PART II Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities ...... 49 Item 6: Selected Financial Data ...... 51 Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations ..... 52 Item 7A: Quantitative and Qualitative Disclosures About Market Risk ...... 83 Item 8: Financial Statements and Supplementary Data ...... 86 Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..... 88 Item 9A: Controls and Procedures ...... 88 Item 9B: Other Information ...... 89 PART III Item 10: Directors, Executive Officers, and Corporate Governance ...... 90 Item 11: Executive Compensation ...... 90 Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...... 90 Item 13: Certain Relationships and Related Transactions, and Director Independence ...... 90 Item 14: Principal Accountant Fees and Services ...... 90 PART IV Item 15: Exhibits and Financial Statement Schedules ...... 91 Signatures ...... 92 Consolidated Financial Statements ...... 94 Consolidated Balance Sheets ...... 94 Consolidated Statements of Operations ...... 95 Consolidated Statements of Comprehensive Income ...... 96 Consolidated Statements of Stockholders’ Equity ...... 97 Consolidated Statements of Cash Flows ...... 98 Notes to the Consolidated Financial Statements ...... 99 Index to Exhibits ...... 167 Throughout this Annual Report on Form 10-K, we refer to First Solar, Inc. and its consolidated subsidiaries as “First Solar,” the “Company,” “we,” “us,” and “our.” Our last three fiscal years ended on December 31, 2014, 2013, and 2012. NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Securities Act of 1933, which are subject to inherent risks, uncertainties, and assumptions that are difficult to predict. All statements in this Annual Report on Form 10-K, other than statements of historical fact, are forward-looking statements. These forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward- looking statements include statements, among other things, concerning: our business strategy, including anticipated trends and developments in and management plans for our business and the markets in which we operate; future financial results, operating results, revenues, gross margin, operating expenses, products, projected costs, and capital expenditures; our ability to continue to reduce the cost per watt of our solar modules; research and development programs and our ability to improve the conversion efficiency of our solar modules; sales and marketing initiatives; and competition. In some cases, you can identify these statements by forward-looking words, such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “seek,” “believe,” “forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,” “might,” “will,” “could,” “predict,” “continue,” and the negative or plural of these words, and other comparable terminology. Forward-looking statements are only pre- dictions based on our current expectations and our projections about future events. All forward-looking statements included in this Annual Report on Form 10-K are based upon information available to us as of the filing date of this Annual Report on Form 10-K. You should not place undue reliance on these forward-looking statements. We undertake no obligation to update any of these forward-looking statements for any reason. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these statements, including, but not limited to: • structural imbalances in global supply and demand for photovoltaic (“PV”) modules; • the market for renewable energy, including solar energy; • reduction, elimination or expiration of government subsidies and support programs for solar energy projects; • our ability to execute on our Long Term Strategic Plan; • interest rate fluctuations and both our and our customers’ ability to secure financing; • our ability to execute on our solar module and balance of systems (“BoS”) cost reduction roadmap; • our ability to attract new customers and to develop and maintain existing customer and supplier relationships; • changes in, or the failure to comply with, government regulations and environmental, health and safety requirements; • our competitive position and other key competitive factors; • environmental responsibility, including with respect to cadmium telluride and cadmium sulfide; • claims under our limited warranty obligations; • future collection and recycling costs for solar modules covered by our module collection and recycling program; • our ability to protect our intellectual property; • our ability to prevent and/or minimize the impact of cyber attacks or other breaches of our information systems; • our continued investment in research and development; • the supply and price of components and raw materials, including cadmium telluride; • our ability to successfully develop and complete our systems business projects;

1 • our ability to attract and retain key executive officers and associates; • general economic and business conditions, including those influenced by international and geopolitical events; and • all other matters discussed in Item 1A: “Risk Factors,” and elsewhere in this Annual Report on Form 10-K. You should carefully consider the risks and uncertainties described under this section.

Unit of Power When referring to our manufacturing capacity, total sales and solar module sales, the unit of electricity in watts for megawatts (“MW”) and gigawatts (“GW”) is direct current (“DC”) unless otherwise noted. When referring to our PV solar power systems, the unit of electricity in watts for MW and GW is alternating current (“AC”) unless otherwise noted.

2 PART I

Item 1: Business Company Overview We are a global provider of solar energy solutions, focused on providing power solutions across key market segments. We design, manufacture and sell PV solar modules with an advanced thin-film semiconductor technology and we develop, design, construct and sell PV solar power solutions that primarily use the solar modules we manufacture. We also manufacture crystalline silicon solar modules with proprietary high-power density, mono-crystalline technology, and we provide single-axis mounting systems with proprietary tracking capabilities. Additionally, we provide operations and maintenance (“O&M”) services to plant owners that use solar modules manufactured by us or by other third-party manufacturers. We have substantial, ongoing research and development efforts focused on module and systems level innovations. We are the world’s largest thin-film PV solar module manufacturer and one of the world’s largest PV solar module manufacturers. Our mission is to create enduring value by enabling a world powered by clean, affordable solar energy. In addressing overall global demand for PV solar electricity, we have developed a differentiated, fully integrated systems business that can provide competitively priced utility-scale PV solutions for system owners and low cost solar electricity to end-users. Our fully integrated systems business has enabled us to drive cost reduction across the value chain and deliver compelling solutions to our customers and end-users. With our fully integrated systems business, we believe we are in a position to continue to expand our business in economically sustainable markets (in which support programs are minimal), which are developing in areas that have a combination of abundant solar resources, relatively high current electricity costs and sizable electricity demand. We are committed to continually lowering the cost of solar electricity, and in the long-term, we plan to compete on an economic basis with conventional fossil-fuel-based peaking power generation. In furtherance of our goal of delivering affordable solar electricity, we are continually focused on reducing PV solar power system costs in five primary areas: module manufacturing, BoS costs (consisting of the costs of the components of a solar power system other than the solar modules that we manufacture, such as inverters, mounting hardware, trackers, grid interconnection equipment, wiring and other devices, and installation labor costs), project development costs, the cost of capital, and the operating expenses of a PV solar system. First, with respect to our module manufacturing costs, we believe our advanced technology has allowed us to reduce our average module manufacturing costs to among the lowest in the world for modules produced on a commercial scale, based on publicly available information. We believe that our module manufacturing cost is competitive, on a comparable basis with, or is lower than, those of traditional crystalline silicon solar module manufacturers. By continuing to improve module conversion efficiency and energy density, increasing production line throughput, and lowering raw material costs, we believe that we can further reduce our manufacturing costs per watt and maintain cost competitiveness with traditional crystalline silicon solar module manufacturers. Second, with respect to our planned BoS cost reduction roadmap, we have aggressive programs which target key improvements in components and system design, which, when combined with continued improvements in solar module conversion efficiency, volume procurement around standardized hardware platforms, use of innovative installation techniques and know how, and accelerated installation times, are expected to result in continued reductions in our BoS costs resulting in a lower system levelized cost of energy. Third, with respect to our project development costs, we seek optimal site locations in an effort to maximize solar resource and minimize transmission and permitting costs, and to accelerate lead times to electricity generation. Fourth, with respect to the cost of capital, by continuing to demonstrate the financial viability and operational performance of our utility- scale PV solar power systems and increasing our system operating experience, we believe we can continue to lower the cost of capital associated with our systems, thereby further enhancing the economic viability of our projects and lowering the cost of electricity generated by PV solar power systems that incorporate our modules and technology. The remaining primary PV solar power system cost relates to the actual operating expenses of a system, which includes the operations and maintenance costs of the plant. We believe that our O&M services are an important aspect to the overall future reduction expected in the levelized cost of electricity (“LCOE”) of a PV solar power system through seamless grid integration, increased reliability and maximization of availability of the systems we operate and maintain for our customers.

3 In addition to enabling the PV system cost reductions described above, we believe that combining our vertical integration across the value chain enables us to be more competitive, accelerate the adoption of our technology in solar power systems, and identify and remove constraints to the successful migration to sustainable solar markets around the world. Our vertically integrated capabilities enable us to maximize value and mitigate risk for our customers and offer valuable benefits such as grid integration and stabilization, thereby positioning us to deliver meaningful PV energy solutions to varied energy problems worldwide. We seek to offer leadership across the entire solar value chain, resulting in more reliable and cost effective PV energy solutions for our customers, and furthering our mission to create enduring value by enabling a world powered by clean, affordable solar electricity.

Market Overview Solar energy is a growing form of renewable energy with numerous economic as well as environmental benefits that make it an attractive complement to, and/or substitute for, traditional forms of electricity generation. In recent years, the price of PV systems, and accordingly the cost of producing electricity from PV solar, has dropped to levels that are in some markets and applications close to or even below the retail price of electricity. The rapid price decline that PV experienced in the last few years opens new possibilities to develop PV systems in some locations with limited or no financial incentives. The fact that a PV solar system requires no fuel provides a unique and valuable hedging benefit to owners of PV systems relative to traditional electricity generation assets. Once installed, solar systems can function for 25 or more years with relatively less maintenance or over- sight, compared to traditional forms of electricity generation. In addition to PV solar’s economic benefits, PV solar has several environmental benefits. For example, PV systems do not generate any greenhouse gas or other emissions and use no or minimal amounts of water compared to traditional forms of electricity generation. Solar markets worldwide continue to develop, aided by the above factors as well as demand elasticity resulting from declining industry average selling prices, both at the module and system level, which make solar power more affordable to new markets, and we have continued to develop our localized presence and expertise in these markets. The solar industry continues to be characterized by intense pricing competition, both at the module and system levels. We believe the solar industry will continue to experience periods of structural imbalance between supply and demand (i.e., where production capacity exceeds global demand), and that such periods will put pressure on pricing. In light of such market realities, we continue to execute our Long Term Strategic Plan described below, under which we are focusing on our competitive strengths. A key core strength is our differentiated, vertically integrated business model that enables us to provide utility-scale PV generation solutions to sustainable geographic markets that have an immediate need for mass-scale PV electricity.

Strategy and Competitive Strengths To build upon our industry leading position and to remain one of the preferred providers of PV energy solutions, we are pursuing the following strategies: differentiation, sustainable growth and financial viability.

Differentiation • First Solar is vertically integrated across substantially the entire solar value chain. Many of the efficiencies, cost reductions and capabilities that we deliver to our customers are not easily replicable for other industry participants that are not similarly vertically integrated. The First Solar model offers PV energy solutions that benefit from our capabilities, including: project development; engineering and plant optimization; grid integration and plant control systems; project finance; advanced PV modules; trackers and fixed mounting systems; procurement and construction consulting; operations and maintenance; energy forecasting; and warranties and performance guarantees. • First Solar systems deliver solar energy that is cost competitive with certain conventional energy sources today, depending on the location and application. Our solutions diversify the energy portfolio and reduce the risk of fuel-price volatility, while delivering a LCOE that is cost competitive in some circumstances with electricity generated from fossil fuels. With the absence of commodity price risk, solar energy has a meaningful value proposition, including a long-term fixed price with relatively low operating costs,

4 reliable energy and no risk of fuel price volatility. When compared to the price of power derived from a conventional source of energy, a fixed price cannot be achieved unless the cost of hedging is included. Hedging costs of a commodity such as natural gas, along with the costs of credit support required for a long-term hedge, can significantly increase conventional energy costs. • First Solar’s bankability and financial credibility enables us to offer meaningful system-level warranties for entire solar power plants years after the installation, which provides us with a competitive advantage relative to some of our peers in the solar sector in the context of project financing. • We offer one of the most bankable utility-scale solar energy solutions in the world. With our proven experience, financial stability and ability to maximize the use of our leading technology in debt-financed projects, our bankable energy solutions provide access to capital and relatively low-cost financing to leading utilities and energy investors. • First Solar has developed advanced grid integration technology, which provides PV plants the ability to actively stabilize the electricity grid and operate more like traditional electricity generation plants. Advanced plant features of our grid integration systems include the ability to provide accurate energy forecasts, regulate voltage, curtail active power when necessary, limit the rate of change of power, prevent trips during faults and disturbances, and react to changes in grid frequency. • First Solar has made significant improvements to BoS components to optimize the entire PV power plant and reduce lifecycle costs. Our proprietary data acquisition, plant control, and mounting systems are examples of plant optimizing technologies that enable us to provide reliable and predictable solar energy, increased energy yields and system availabilities, faster construction velocities, and a lower levelized cost of electricity. Additionally, our advanced plant controls enable seamless integration of our utility scale solar plants onto the electricity grid, providing vital grid support services such as voltage and power factor regulation, active and reactive power control, ramp rate control, frequency regulation, and fault ride- through. • We invest significant resources in advanced research and development (“R&D”), both at the module and system level. First Solar’s R&D model differentiates us from our competition due to its vertical integration, from advanced research to product development, manufacturing and applications. Our module conversion efficiency has improved on average more than half a percent every year for the last 10 years. First Solar has recently achieved two new world records for cadmium telluride (“CdTe”) PV efficiency, achieving independently certified research cell efficiency of 21.5% and total area module efficiency of 17.0%. Our module R&D efforts are being focused on continually improving the energy density of other modules and otherwise driving improvements in the lifetime energy production of our modules while simultaneously integrating our module and BoS offerings for cost effective, productive and reliable PV power plants. • In many climates, First Solar’s CdTe PV module can provide an energy yield advantage over conventional crystalline silicon solar modules with equal power rating. For example, in humid climates, our CdTe PV module provides a superior spectral response and in hot climates, our CdTe PV module provides a superior temperature coefficient. As a result, at temperatures above 25°C, First Solar CdTe modules produce more energy than competing conventional crystalline silicon solar modules with equal power rating. This performance advantage provides stronger plant performance in high temperature climates, which is particularly advantageous as more than 90% of a plant’s generation on average (in typical hot climates) occurs when module temperatures are above 25°C. As a result, First Solar power plants can produce up to 8% more annual energy than competing power plants with the same nameplate capacity. • First Solar CdTe PV modules are manufactured in a high-throughput, automated environment that integrates all manufacturing steps into a continuous flow line. At the outset, a sheet of glass enters the production line and in less than 2.5 hours it is transformed into a complete PV module-flash tested, boxed and ready for shipment. We currently have 30 manufacturing lines worldwide and 2.7 GW of annual manufacturing capacity. Each line is currently capable of producing approximately 2,500 modules per day; totaling approximately 70,000 modules each day across 30 lines. About every 1.2 seconds, a completed PV module rolls off a First Solar line somewhere in the world. With expected increases in module

5 efficiency as per our roadmap, our capacity has a potential to scale up to approximately 3 GW in 2017 based on the 30 existing lines. In addition, our stored manufacturing equipment includes up to 10 lines either from our former German factories or from manufacturing facilities that we put on hold with capacity of up to approximately 1.3 GW. As a result our total available manufacturing capacity includes up to 4.3 GW of either installed or stored capacity that can be readily installed and deployed in production and become a significant enabler of our future growth. In January 2015, we marked a new milestone by achieving 10 GW of solar capacity installed globally using our CdTe PV modules manufactured to date, making us the first thin film PV module manufacturer in the world to achieve this milestone. • First Solar crystalline silicon modules are made from high efficiency N Type Mono cells manufactured in our first crystalline silicon wafer fab in Kulim, Malaysia and then assembled into a 60 or 72 cell module by third party contract manufacturers. The wafer fab began production in December 2014 and is expected to be ramping to full capacity during the first half of 2015. When fully ramped, the cell factory will have the capacity to produce 55,000 156mm cells per day for a nameplate capacity of 100 MW annually. The standard First Solar 60 cell PV module will have a power rating of 300 watts. The manufacturing process is expected to deliver a very high efficient cell at a much lower manufacturing cost than is currently available in the marketplace. We believe the ability to offer solar solutions based on two different module platforms (CdTe modules, particularly suited for utility-scale or larger commercial and industrial applications, and high efficiency crystalline silicon modules, particularly suited for rooftop or other constrained space applications), is a source of positive differentiation relative to our competitors, many of whom are capable of providing solar solutions using only one module category. • O&M is a key driver for power plants to deliver on their projected revenues. By leveraging our extensive experience in plant optimization and advanced diagnostics, we have developed one of the most advanced O&M programs in the industry. With more than 2.5 GW AC of utility-scale PV plants under the O&M program, we maintain a fleet average system availability greater than 99.5%. Our experienced O&M staff enhances the probability that our customers’ power plants produce the energy predicted in their energy model. Our products and services are engineered to maximize energy output and revenue for our customers while significantly reducing their unplanned maintenance costs. Plant owners benefit from predictable expenses over the life of the contract and reduced risk of energy loss. Our goal is to optimize our customers’ power plants to produce the maximum amount of energy production and revenue under their power purchase agreement (“PPA”) throughout its operational life. We have made significant investments in O&M technologies in order to develop and create a scalable and sustainable O&M platform. Our O&M program is compliant with the North American Electric Reliability Corporation (“NERC”) standards and is designed to be scalable to accommodate the growing O&M needs of customers worldwide. Our 2014 acquisition of skytron-energy, which has installed monitoring and control systems in more than 600 PV plants across Europe with a total peak capacity of 5 GW, more than doubled our portfolio of monitored assets and greatly expanded our worldwide O&M capabilities. We believe our O&M expertise is a significant differentiator, as it is difficult for many competitors to replicate this experience. • We manage, as owner or partial owner, project assets to preserve and enhance shareholder value. We provide seamless management of projects from initial land development through construction, commissioning, and operation bringing to bear all of our experience in each of these phases.

Sustainable Growth In executing our Long Term Strategic Plan we are focusing on providing solar PV generation solutions to sustainable geographic markets that we believe have a compelling need for mass-scale PV electricity, including markets throughout the Americas, Asia, Australia, the Middle East, and Africa. As part of our Long Term Strate- gic Plan, we are focusing on opportunities in which our solar PV generation solutions can compete directly with fossil fuel offerings on an LCOE or similar basis, or complement such fossil fuel electricity generations. Execution of the Long Term Strategic Plan entails a development of resources around the globe, in particular, dedicating resources to regions such as Latin America, Asia, the Middle East, and Africa. We are evaluating and managing closely the appropriate level of resources required as we transition into and penetrate these specific markets. We have and intend to continue to dedicate significant capital and human resources to reduce the total

6 installed cost of solar PV generation, to optimize the design and logistics around our solar PV generation solutions, and to ensure that our solutions integrate well into the overall electricity ecosystem of each specific market. We expect that, over time, an increasing portion of our consolidated net sales, operating income, and cash flows will come from solar offerings in the sustainable markets described above as we execute on our Long Term Strategic Plan. The timing, execution and financial impacts of our Long Term Strategic Plan are subject to risks and uncertainties, as described in Item 1A: “Risk Factors.” Joint ventures or other business arrangements with strategic partners are a key part of our Long Term Strate- gic Plan, and we use such arrangements to expedite our penetration of various markets and establish relationships with potential customers and policymakers. Some of these business arrangements have and are expected in the future to involve significant investments or other allocations of capital on our part. We continue to develop relationships with policymakers, regulators, and end customers in each of these markets with a view to developing markets for utility scale PV solar power systems. We sell solar power solutions directly to end customers, including independent power producers, utilities, retail electricity providers, and commercial and industrial customers. Depending on the market opportunity, our sales offerings range from module only sales, to module sales with a range of development, engineering, procurement, and construction (“EPC”) services and solutions, to full turn- key PV solar power system sales. We expect these sales offerings to continue to evolve over time as we work with our customers to optimize how our PV solar generation solutions can best meet our customers’ energy and economic needs. In addition to our utility-scale power plant offerings, we have fuel displacement, commercial, industrial, and off-grid and energy access offerings as described below.

Financial Viability First Solar’s commitment is to create long-term shareholder value and generate returns on invested capital in excess of its weighted average cost of capital over that time horizon. Despite substantial downward pressure on the price of solar modules due to significant excess capacity in the industry, we have continued to deliver strong financial performance and liquidity. As planned, we expect to continue to drive operating expense efficiencies and improvements while still investing in growth, the continued development of our global sales capabilities and our R&D roadmap. We seek to balance our incentive compensation and decision-making processes to ensure we direct our efforts and investments towards long-term profitable and sustainable growth with appropriate returns on invested capital and reinvest excess returns back into the business.

Offerings and Capabilities Offerings We are focusing our resources in markets and on energy applications in which solar power can be a least- cost, best-fit energy solution, particularly in regions with high solar resources, significant current or projected electricity demand and/or relatively high existing electricity prices. We differentiate our product offering by geographic market and localize the solution, as needed. Our consultative approach to our customers’ solar energy needs and capabilities results in customized solutions to meet their economic goals. We have designed our customer solutions according to the needs of the following different business areas. Although we have substantial experience with the utility-scale power plant and advanced PV module offerings described below, certain other offerings are in various stages of development. • Utility-Scale Power Plant. We have extensive, proven experience in delivering reliable grid-connected bulk power systems for utility-scale generation. First Solar’s grid-connected PV power plants diversify the energy portfolio, reduce fossil-fuel consumption, reduce the risk of fuel price volatility, and save costs, proving that centralized solar generation can deliver reliable and affordable solar electricity to the grid in many places around the world. Benefits of our grid-connected bulk power system solutions include reduction of fuel imports and improvements in energy security; diversification of the energy portfolio and reductions of risk related to fuel-price volatility; enhanced peaking generation and faster time-to-power; improved grid reliability and stability with advanced PV plant controls and managed PV variability through accurate forecasting. • AC Power Block. First Solar’s AC Power Block is a pre-engineered system solution with guaranteed performance, consisting of First Solar modules, mounting solutions, third-party inverters, a power block

7 warranty and certain related services and is available in modular units ranging from 800 kilowatts to 3.8 MW. Building on the core of our PV plant technology, the AC Power Block enables our local EPC partners to develop PV power plants in diverse regions. By utilizing technologies optimized by First Solar, the AC Power Block is designed to provide verification of the power plant energy model ensuring that delivered performance equals predicted performance. The AC Power Block is designed to (i) feature execution by a local partner with First Solar technology and training; (ii) provide a bankable revenue stream; (iii) streamline development, financing, permitting, installation, and commissioning; (iv) reduce LCOE and (v) ensure predictable energy performance. As a result of First Solar’s experience in utility-scale generation, First Solar power plants can deliver an accurate energy profile, cost structure and be optimized for project-specific economics. By applying our knowledge and technical expertise to the AC Power Block solution, we are able to predict the energy model and guarantee the first year revenues. The AC Power block performance guarantee is expected to result in a high level of bankable revenue stream for project owners. • Fuel Displacement. Our hybrid power plant solutions, which are currently in development, are expected to reduce fuel consumption and save costs for certain energy customers using liquid fuel as their primary energy source. Today, solar electricity is cheaper than diesel generated electricity in certain markets. With fixed pricing and no fuel-price volatility, solar can provide a meaningful value proposition for energy customers burning liquid fuel as their primary energy source. Our innovative hybrid system solutions can provide cost-competitive solar energy as an alternative source of fuel, reducing fuel consumption and variable costs with reliable and affordable solar electricity. Benefits of our fuel displacement offerings include the reduction of fuel consumption and cost savings; an increase in fuel reserves or exports at

market prices; a smaller impact from fuel price volatility; greater energy independence; reduction of CO2 emissions and generator operating time. • Commercial and Industrial (“C&I”) — Distributed Generation. We are in the process of developing system solutions, both ground-mounted and roof-top, for commercial and industrial applications, using both our CdTe PV technology and our high efficiency crystalline silicon technology. Distributed solar generation can be deployed rapidly, and because the energy generated is consumed locally, less energy is lost in transmission from the point of production. While our CdTe PV modules have been used in many C&I systems worldwide, our high-power density, mono-crystalline solar modules are particularly attractive in restricted spaces, enabling our customers to pack more power and energy production into each location, resulting in improved performance in site-constrained locations. • Off-Grid and Energy Access. Our off-grid and energy access offerings, currently in development, can address underserved energy markets and bring power solutions to some of the approximately 1.3 billion people without access to a modern energy grid. First Solar’s energy access offerings are expected to provide a practical and affordable option for underserved off-grid energy markets across the globe. Our mini-grid capabilities under development can provide aggregate surplus supply for village electrification in remote locations to power homes, schools, hospitals, telecommunication systems, and many other modern applications. Our underserved energy market capabilities under development can provide base-load solar generation with no fuel cost or delivery risk; reduce health risks associated with kerosene and diesel fuel; support fast installation, low maintenance, and easy service and provide income generation and economic development opportunities. We are currently engaged in three off-grid energy access test pilot sites in Kenya. • Community Solar. Our community solar offering addresses the residential and small business sectors, providing a broad range of customers access to competitively priced solar energy regardless of the suit- ability of their rooftops. Community solar utilizes relatively small ground-mounted installations that provide clean energy to utilities, which then offer consumers the ability to buy into a specific community installation and benefit from the solar power generated by that resource. First Solar’s expertise in utility scale generation and module technology, paired with the community solar project development expertise of our partner Clean Energy Collective, allows residential power consumers to “go solar,” including those who live in apartment buildings or whose home rooftops cannot accommodate solar panels. We are currently working with strategic partners to develop a commercially scalable community solar offering. • Advanced PV Modules. Our Series 4 and Series 3 Black Plus CdTe PV module outperforms conventional crystalline silicon solar modules with equal power rating due in part to superior spectral response

8 and temperature coefficient in many climates. At temperatures above 25°C, First Solar modules produce more energy than conventional crystalline silicon solar modules with equal power rating. Our TetraSun crystalline silicon module is designed for applications where space is at a premium or customers prefer a high power density solution. With a proprietary cell architecture, our crystalline silicon modules offer one of the industry’s highest power ratings and conversion efficiencies and lowest temperature coefficients, resulting in high energy density in space-constrained installations.

Full Suite of Capabilities The First Solar model offers PV energy solutions with superior value and less risk with our expertise across substantially the entire solar value chain, including: • Project Development. During project development, we obtain land and land rights for the development of PV solar power systems incorporating our modules, negotiate long-term PPAs with potential purchasers of the electricity to be generated by those plants or develop plants in regulated markets where feed-in- tariff (“FiT”) or similar structures are in place, manage the interconnection and transmission process, negotiate agreements to interconnect the systems to the electricity grid, and obtain the permits which are required prior to the construction of the PV solar power systems, including applicable environmental and land use permits. We also buy projects in various stages of development and continue developing those projects with system designs incorporating our own modules. We sell developed PV solar power systems to system operators who wish to own generating facilities, such as utilities, or to investors who are looking for long-term investment vehicles that are expected to generate consistent returns. • EPC Services. We provide EPC services to projects developed by us, to projects developed by independent solar power project developers, and directly to system owners such as utilities. EPC products and services include engineering design and related services, BoS procurement, advanced development of grid integration solutions, and construction contracting and management. Depending on the customer and market need, we may provide our full EPC services or any combination of individual products and services within our EPC capabilities. An example of such combination of individual services would be providing engineering design and procurement of BoS parts (“EP” services) for a third-party constructing a PV solar power system. • O&M Services. We have a comprehensive O&M service offering with multiple PV solar power systems in operation. Utilizing a state of the art Global Operations Center, our team of O&M experts provide comprehensive services including NERC compliance, energy forecasting, 24/7 monitoring and control, PPA and Large Generator Interconnection Agreement compliance, performance engineering analysis, turn-key maintenance services including spare parts and breakdown repair, and environmental services. We offer our O&M service to solar power plant owners that use either our solar modules or modules manufactured by other third-party manufacturers. • Project Finance. Our project finance group is primarily responsible for negotiating and executing the financing, structuring and/or sales of PV solar power systems incorporating our modules, which allows us to optimize the value of our project development portfolio. Our project finance team includes professionals with experience in arranging financing including non-recourse project debt financing in the bank loan markets and debt capital markets and project equity capital from tax oriented and strategic industry equity investors. • The First Solar Tracker and Other Balance of System. BoS consists of all of the non-module components of the solar power plant. We sell certain components of the solar system including single-axis trackers, which are manufactured by a third-party using our proprietary technology. We offer several proprietary mounting solutions that have been custom-designed by First Solar engineers to integrate exclusively with our modules and reduce system costs. Project specific factors such as the local irradiance, weather, soil, wind, and topography will dictate the optimal mounting solution for each project. With a single-axis tracker technology and multiple fixed mounting solutions to choose from, we offer a suite of mounting systems that have been engineered to maximize energy output, increase installation velocity, and reduce costs. Our proprietary tracker systems follow the sun throughout the day to maximize energy

9 output and generate up to 25% more energy than fixed mounting systems. In addition, our vertical integration combined with partner collaboration has enabled us to continue to make system-level improvements, such as a next-generation PV solar plant design in development combining our CdTe modules with GE’s ProSolar 1500 volt inverter/transformer system. • Asset Management. We have energy professionals with extensive experience in managing merchant positions in energy markets. We utilize these professionals to implement opportunistic strategies to secure power sales contracts, and hedge market exposure to optimize value while mitigating price risk. We are also developing capabilities in power sales and marketing, which will enable us to source buyers of electricity from our projects as needed, for instance during any stub periods between a solar plant’s commercial operation date and the subsequent start date of a long-term PPA.

Global Markets We have established and are continuing to develop a localized business presence on six continents, as described below. Energy markets are by their nature localized, with different drivers and market forces impacting electricity generation in a particular region or for a particular application. Accordingly, our business is evolving worldwide and shaped by the varying ways in which our PV solar solutions can be a compelling and economically viable solution to energy needs in different markets and applications.

The Americas • United States. Multiple PV markets in the United States, which accounted for 90% of our 2014 net sales, exemplify several of the criteria critical for a sustainable solar market: (i) sizeable electricity demand, particularly around growing population centers and industrial areas, (ii) high existing power prices, and (iii) abundant solar resources. In those areas and applications in which these factors are more pronounced, our PV solar solutions are getting closer to competing solely on an economic basis with more traditional forms of energy generation. The market penetration of PV solar is impacted by certain state and federal support programs, including the 30% federal investment tax credit set to step down to 10% at the end of 2016, as described under “Market Overview” and “Support Programs.” We have significant experience and a market leadership position in developing, financing, engineering, constructing, and maintaining utility-scale power plants in the United States, particularly in California and other southwestern states. Currently, our solar projects in the United States account for a majority of the 1.5 GW AC advanced-stage pipeline of projects that we are either currently constructing or expect to construct. See Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Systems Proj- ect Pipeline” for more information about these projects. • Chile. Chile is a promising region for PV solar in that certain markets are characterized by high existing electricity prices, abundant solar resources and visible demand in the form of mining or industrial activity. The Chilean government’s National Energy Strategy includes expansion of the country’s renewable energy capacity to 20 percent of its total generated power by 2025. In 2014, we began construction on our 141 MW AC Luz del Norte PV power plant located near Copiapó, Chile. Energy from Luz del Norte, once completed, will be supplied into the Chilean Central Interconnected System, contributing significantly toward Chile’s renewable energy goal. In addition to being the largest solar plant in the region, Luz del Norte, once completed, will be the biggest solar power facility in the world to sell electricity on an open contract basis. • Other Americas. We are developing our business in other countries in the Americas including Brazil, Mexico, and certain Central American countries.

Europe, Middle East and Africa • Europe. While PV solar adoption in prior years was driven to a large degree by feed-in-tariffs and other incentive programs in Germany, France, Italy and Spain, PV solar has entered its next phase in which growth will ultimately be determined by the degree to which PV solar solutions can compete economically with more traditional forms of electricity generation, particularly in areas with high prevailing electricity prices, strong electricity demand and strong solar resources. In particular, the UK, Germany, France and the Netherlands are all running tenders in which large-scale solar PV can bid for capacity.

10 In Europe, which accounted for approximately 4% of our 2014 net sales, we have been engaged in project development activities with respect to certain projects in the United Kingdom, Germany, France and the Netherlands, and we are actively evaluating additional project and business opportunities in Turkey, Israel and emerging Southeastern European markets as well as mature Western European solar markets. We are party to a joint venture with Belectric Solarkraftwerke GmbH to realize solar energy projects on three continents. The joint venture is based in Germany and is tasked with developing selected PV power projects independently acquired or developed by either of the two companies in Europe, North Africa, as well as projects of fewer than 20 megawatts, in the United States. Under the terms of the joint venture, First Solar will supply its thin-film modules, selected components such as the First Solar tracker and value- added services, while Belectric will provide its advanced balance of systems and a range of service capabilities. Both companies’ engineering, procurement and construction contributions will vary by project and geography. In November 2014, First Solar and Belectric announced ground-breaking on a new 46 MW DC utility-scale power plant, in Oxfordshire, Southern England.The project is the fourth to be exe- cuted in the United Kingdom under the joint venture; with its recently built solar farms in Wiltshire and East Anglia, the joint venture is expecting to reach a total capacity of 80 MW DC in the United Kingdom. • Middle East. The Middle East region offers strong growth potential driven by a combination of economics, abundant solar resources and robust policy. Key markets in the region, including the United Arab Emirates, Jordan, and Egypt, have implemented policy mechanisms designed to ramp up the share of renewable energy in their generation portfolios. While their motives for investing in solar energy range from energy security to the diversification of their generation portfolios to the minimization of domestic consumption of hydrocarbons, the common factor is that the economics of solar PV have made it a compelling choice as a generation source. Jordan and Egypt have actively facilitated the development of the independent power production sector in their countries, as a means of responding to urgent energy needs. For example, Jordan has committed to installing 600MW of solar PV capacity by 2020, while Egypt recently launched the Middle East’s first multi-gigawatt scale solar tender, which was over-subscribed. Meanwhile, the emirate of Dubai, in the United Arab Emirates, doubled the capacity of the second phase of its flagship solar park to 200MW; it has also tripled its renewable energy commitment from 5 to 15 percent of its generation capacity by 2030. However, as with any emerging market, challenges remain and these are primarily with regard to evolving policy and legislation, prevailing energy subsidies, available infrastructure, and geopolitical risk. First Solar is pursuing a wide range of opportunities to support the Middle East region’s efforts to culti- vate its considerable solar resources. We established a local business presence in Dubai and in Saudi Arabia. We constructed the 13 MW DC first phase of the Mohammed bin Rashid Al Maktoum Solar Park in Dubai, which set the benchmark for utility scale solar in the region. In Jordan, we supported the development of and will construct the 53MW AC Shams Ma’an solar plant, which is expected to account for one percent of Jordan’s annual energy output, when it is completed in 2016. • Africa. Africa offers strong potential for PV solar, which can play a useful role meeting the region’s varying energy needs. For example, the mining industry in South Africa and around the region is working to address electricity supply challenges that have a direct impact on operations. Whether mines are grid- connected or relying on diesel generators, solar energy, with its cost competitiveness and reliability, represents a meaningful value proposition. Deploying PV hybrid solutions that supplement existing power sources, such as the electricity grid or diesel generators, can help mining companies address their daytime electricity supply challenges, while minimizing costs and lowering their environmental impact. In South Africa, the government is procuring bids under a competitive tender process in support of a target of procuring over 18 GW of renewable energy (wind, solar, etc.) by 2030 in South Africa’s Integrated Resource Plan of which over 8.4 GW was allocated to solar PV. We are also developing energy access locations using PV solar to address the electricity needs of people in Africa without access to a modern energy grid, as described above under “Business — Offerings and Capabilities — Off-Grid and Energy Access.” First Solar has established an operating subsidiary in Cape Town, South Africa as a regional hub for activities across sub-Saharan Africa.

11 Asia-Pacific (“APAC”) and India • Australia. Australia is a promising region for PV solar in that certain markets are characterized by abundant solar resources and visible demand in the form of mining and industrial activity. In Australia, which accounted for approximately 5% of our 2014 net sales, the solar industry is impacted by several regulatory initiatives that support the installation of solar PV modules in both rooftop and free-field applications, including the federal government’s national Renewable Energy Target, which has set a renewable energy goal of 20% by 2020. This target is the subject of political debate and the development of large scale renewable energy projects is currently constrained by the uncertainty. Additional support has been provided by the Australian Renewable Energy Agency which offers grant-based funding for solar PV projects in both grid-connected and off-grid applications. First Solar is currently constructing for AGL Energy Limited a 102 MW solar power plant at Nyngan and a 53 MW solar project at Broken Hill, both located in New South Wales. The Nyngan and Broken Hill solar projects will be Australia’s largest utility-scale solar projects once completed in 2015. In 2012, First Solar completed construction of the 10 MW Greenough River Solar Farm in Western Australia in cooperation with Verve Energy and GE Energy Financial Services. Greenough River Solar Farm is the largest PV solar farm in operation in Australia. In addition to supplying thin film PV modules and EPC services for the plant, First Solar is providing O&M services under a 15 year contract. • Japan. Japan has evolving electricity market characteristics, particularly after the 2011 Fukushima Daii- chi nuclear disaster, that make it an attractive market for PV solar. Japan announced new safety standards after the failure of the Fukushima Daiichi nuclear power station resulting in the idling of Japan’s nuclear reactors, which historically generated nearly 50 GW or 30% of the country’s electricity. Japan has few domestic fossil fuel resources and as a result of the shutdown of its nuclear reactors, it further increased its dependence on fossil fuel imports to cover the generation shortfall. Japan is the largest importer of lique- fied natural gas globally. The Japanese government has announced a long-term goal of dramatically increasing installed solar power capacity. Japan is a signatory to the Kyoto Protocol, which requires it to reduce greenhouse gas emissions. As Japan will not likely reach its renewable energy (including solar) targets, Japan has provided incentives for solar power installations. Its FiT program has been over- subscribed, leading some of the distribution companies to limit the granting of new interconnection requests. However, high solar demand is expected to be maintained in Japan over the next several years. We established a Japan operating subsidiary and opened an office in Tokyo to effectively pursue growth opportunities. In 2014, we completed construction of a 1.4 MW DC solar project in Kitakyushu-shi, Japan using our CdTe PV modules. We are expecting to partner with Japanese companies to develop, construct, and operate solar power plants, mitigating Japan’s dependence on nuclear power and natural gas fuel imports. Our sales offerings in Japan include both our CdTe modules and high efficiency TetraSun crystalline silicon modules. • India. There is significant potential for PV in India due to its growing energy needs, substantial population centers, a lack of electrification to many parts of the country, high competing energy costs, high levels of irradiance, and the aggressive renewable energy targets set by the government. In India, the Central Government has initiated actions to roll out Phase-III of its Jawaharlal Nehru National Solar Mis- sion (“JNNSM”), which aims to install 22 GW of new solar electricity generating capacity by 2022, or a cumulative target capacity addition of 11 GW between 2013-17 as part of Phase II of JNNSM. In addition to national level initiatives, various Indian states have also embarked on solar power programs at the state level. Renewable Purchase Obligations (“RPOs”) have been introduced to help drive the PV market in India. Affected electricity consumers can achieve their purchase obligations by setting up their own installation or purchasing power directly through a PPA. Alternatively they can purchase solar Renewable Energy Certificates from other producers to meet their target. In 2014, we announced plans to build 45 MW AC of utility-scale solar plants at two sites in the state of Telangana, India. The project will supply electricity through the grid to the Southern Distribution Com- pany of Telangana State Limited for a period of 20 years. Additionally, we continue to maintain our equity investment in Kiran Energy Solar Power Pvt. Ltd. and Mahindra Solar One Pvt. Ltd. power plants

12 in India’s Rajasthan state. First Solar in India is seeking to develop utility scale solar PV projects, address the energy/RPO needs of the utilities and also target the open access industrial and commercial power demand. Options such as partnering with local entrepreneurs to develop solutions for segments in the energy access market and creating solutions by combining solar PV with other modes of generation and reduce dependence on liquid fuels especially in back-up (or even primary power) markets are also being explored. For a description of some of the risks associated with our efforts in India, see “Item 1A: Risk Factors — Risks Related to Our Markets and Customers — Our ability to pursue an expansion strategy in India could be adversely affected by protectionist or other adverse public policies.” • Other APAC. We are developing our business in other APAC countries including Indonesia, Malaysia, Thailand and the Philippines. Each of these regions has one or more market characteristics or trends (such as an environment of declining fuel subsidies in Indonesia) which can make PV solar electricity attractive. In China, we continue to evaluate our options and remain committed to our presence, with the goal of developing sales and joint venture opportunities in the market.

Support Programs Although our Long Term Strategic Plan provides for First Solar to transition over time toward operating in sustainable markets that do not require solar specific government subsidies or support programs, in the near-term our net sales and profits remain subject to variability based on the availability and size of government subsidies and economic incentives. Support programs for PV solar electricity generation, depending on the jurisdiction, include FiTs, quotas (including renewable portfolio standards and tendering systems), and net energy metering programs. In addition to these support programs, financial incentives for PV solar electricity generation include tax incentives, grants, loans, rebates, and production incentives. Although we expect to become less impacted by, and less dependent on, support programs as we execute our Long Term Strategic Plan and transition into primarily sustainable markets, support programs will continue to play varying roles in accelerating the adoption of PV solar systems around the world. In Europe, renewable energy targets, in conjunction with FiTs, Renewable Obligation Certificates (“ROC’s”) and other schemes such as tenders for large-scale PV, have contributed to the growth in PV solar markets. Renewable energy targets prescribe how much energy consumption must come from renewable sources, while incentive policies and competitive tenders policies are intended to support new supply development by providing investor certainty. A 2009 European Union (“EU”) directive on renewable energy, which replaced an earlier 2001 directive, sets varying targets for all EU member states in support of the directive’s goal of a 20% share of energy from renewable sources in the EU by 2020, and requires national action plans that establish clear pathways for the development of renewable energy sources. Tax incentive programs exist in the U.S. at both the federal and state level and can take the form of investment and production tax credits, accelerated depreciation and sales and property tax exemptions and abatements. At the federal level, investment tax credits for business and residential solar systems have gone through several cycles of enactment and expiration since the 1980’s. In October 2008, the U.S. Congress extended the 30% federal energy investment tax credit (“ITC”) for both residential and commercial solar installations for eight years, through December 31, 2016. The ITC is a primary economic driver of solar installations in the U.S. Its extension through 2016 has contributed to greater medium term demand visibility in the U.S.; however, its step- down to 10% at the end of 2016 (unless extended) underscores the need for the LCOE from solar systems to continue to decline toward grid parity. The step-down of the 30% ITC poses significant uncertainties regarding the future of U.S. PV solar market demand. The majority of states in the U.S. have enacted legislation adopting Renewable Portfolio Standards (“RPS”) mechanisms. Under an RPS, regulated utilities and other load serving entities are required to procure a specified percentage of their total electricity sales to end-user customers from eligible renewable resources, such as solar generating facilities, by a specified date. Some programs may further require that a specified portion of the total percentage of renewable energy must come from solar generating facilities. RPS legislation and implementing regulations vary significantly from state to state, particularly with respect to the percentage of renewable energy required to achieve the state’s RPS, the definition of eligible renewable energy resources, and the extent to which renewable energy credits (certificates representing the generation of renewable energy) qualify for RPS com-

13 pliance. Measured in terms of the volume of renewable electricity required to meet its RPS mandate, California’s RPS program is the most significant in the U.S., and the California market for renewable energy has dominated the western U.S. region for the past several years. First enacted in 2002, California’s RPS statute has been amended several times to increase the overall percentage requirement as well as to accelerate the target date for program compliance. Pursuant to amendments enacted by the California Legislature in 2011, the California RPS program now requires utilities and other obligated load serving entities to procure 33% of their retail electricity demand from eligible renewable resources by 2020. In 2014, approximately 73% of our total net sales were derived from our systems projects or third-party module sales to solar power systems in California.

Business Segments We operate our business in two segments. Our components segment involves the design, manufacture, and sale of solar modules which convert sunlight into electricity. We manufacture CdTe modules and we also began manufacturing high-efficiency crystalline silicon modules during the fourth quarter of 2014. Third-party customers of our components segment include project developers, system integrators, and owners and operators of PV solar power systems. Our second segment is our fully integrated systems business (“systems segment”), through which we provide complete turn-key PV solar power systems, or solar solutions that draw upon our capabilities, which include (i) project development, (ii) EPC services, (iii) O&M services, and (iv) project finance expertise, all as described in more detail below. We may provide our full EPC services or any combination of individual products and services within our EPC capabilities depending upon the customer and market opportunity. All of our systems segment products and services are for PV solar power systems which primarily use our solar modules, and such products and services are sold directly to investor owned utilities, independent power developers and producers, commercial and industrial companies, and other PV solar power system owners. Additionally, within our systems segment, we may hold and operate certain of our PV solar power systems based on strategic opportunities. See Note 24 “Segment and Geographical Information,” to our consolidated financial statements for the year ended December 31, 2014 included in this Annual Report on Form 10-K for further information on our business segments.

Components Business Our components business involves the design, manufacture, and sale of solar modules which convert sunlight into electricity.

Solar Modules CdTe Modules. Our flagship module since the inception of First Solar has been manufactured using our advanced CdTe thin-film technology. Each solar module is a glass laminate approximately 2ft x 4ft (60cm x 120cm) in size that encapsulates a CdTe thin-film semiconductor. Our solar modules had an average rated power per module of approximately 95 watts, 91 watts, and 86 watts for 2014, 2013, and 2012, respectively. During 2014, we announced the release of our Series 4TM module, which offers up to eight percent more energy than conventional crystalline silicon modules with the same power rating, and is compatible with advanced 1500-volt plant architectures. The Series 4ATM variant features a new anti-reflective coated glass, which enhances energy production. Our semiconductor structure is a single-junction polycrystalline thin-film that uses CdTe as the absorption layer. CdTe has absorption properties that are matched to the solar spectrum and can deliver competitive conversion efficiencies using only about 1-2% of the amount of semiconductor material (i.e., silicon) that is used to traditional manufacture crystalline silicon solar modules. One of the drivers of First Solar modules’ performance advantage over crystalline silicon modules is a lower temperature coefficient, delivering higher energy yields at elevated operating temperature typical of utility-scale solar power plants in sunny regions. Crystalline Silicon Modules. In the fourth quarter of 2014, we began manufacturing modules incorporating high-efficiency crystalline silicon technology for deployment in space constrained applications. Descriptions below of our components business relate to our CdTe modules unless otherwise noted.

14 Manufacturing Process CdTe Modules We manufacture our CdTe solar modules on high-throughput production lines and perform all manufacturing steps ourselves in an automated, proprietary, and continuous process. Our solar modules employ a thin layer of semiconductor material to convert sunlight into electricity. Our manufacturing process eliminates the multiple supply chain operators and expensive and time-consuming batch processing steps that are used to produce crystalline silicon solar modules. Currently, we manufacture our solar modules at our Perrysburg, Ohio, and Kulim, Malaysia manufacturing facilities. We have integrated our CdTe manufacturing processes into a continuous production line with the following three stages: the deposition stage, the cell definition and treatment stage, and the assembly and test stage. In the deposition stage, panels of transparent oxide-coated glass are robotically loaded onto the production line where they are cleaned, heated, and coated with thin layers of cadmium sulfide followed by a layer of CdTe using our proprietary vapor transport deposition technology, after which the semiconductor-coated plates are cooled rapidly to increase strength. In the cell definition and treatment stage, we use high speed lasers to transform the large single semiconductor coating on the glass plate into a series of interconnected cells that deliver the desired current and voltage output. In this stage, we also treat the semiconductor film using proprietary chemistries and processes to improve the device performance, and we apply a metal terminated sputtered back contact. Finally, in the assembly and test stage, we apply busbars, inter-laminate material, and a rear glass cover sheet that is lami- nated to encapsulate the semiconductor. A junction box and termination wires are then applied to complete the assembly. The final assembly stage is the only stage in our production line that requires manual processing. We maintain a robust quality and reliability assurance program that monitors critical process parameters to ensure that industry and internal standards are met. This rigorous set of evaluations is conducted prior to each solar module undergoing acceptance testing for both electrical leakage and power measurement on a solar simu- lator. The quality and reliability tests complement production surveillance with an ongoing monitoring program, subjecting production modules to accelerated life cycle and stress testing to ensure conformance to requirements of the International Electrotechnical Commission (“IEC”) and Underwriters Laboratories Inc. (“UL”). This program assures a high level of product quality and reliability, helping to predict power performance in the field.

Crystalline Silicon Modules We manufacture our crystalline silicon cells in our new wafer fab in Kulim, Malaysia. The manufacturing process starts with 156mm N Type mono crystalline silicon wafers supplied by a variety of wafer suppliers. Incoming wafers are subjected to a series of inspections to ensure that high quality standards are met. The proprietary manufacturing process consists of passivation, annealing, metallization, printing, wet cleans and elec- troplating steps and are all fully automated independent steps. Completed cells are tested and binned according to strict performance criteria. The final module assembly is completed by a contract manufacturing company that performs manufacturing to our module specifications using a bill of materials managed by us. We maintain a robust quality and reliability assurance program that monitors critical process parameters to ensure that industry and internal standards are met. This rigorous set of evaluations is conducted prior to each solar module undergoing acceptance testing for both electrical leakage and power measurement on a solar simu- lator. The quality and reliability tests complement production surveillance with an ongoing monitoring program, subjecting production modules to accelerated life cycle and stress testing to ensure conformance to IEC and UL requirements. This program assures a high level of product quality and reliability, helping to predict power performance in the field.

Research, Development, and Engineering We continue to devote substantial resources to research and development with the primary objective of lowering the lifecycle cost of electricity generated by our PV systems. We conduct our research and development activities primarily in the United States. Within our components business, we focus our research and development activities on, among other areas, continuing to increase the conversion efficiency and energy yield of our solar modules and continuously improving durability and manufacturing efficiencies, including throughput improvement, volume ramp, and material cost reduction.

15 In the course of our research and development activities, we continuously explore and research technologies in our efforts to sustain competitive differentiation in our modules. We typically qualify process and product improvements for full production at our Perrysburg, Ohio plant and then use a systematic process to propagate them to our other production lines. We believe that our systematic approach to technology change management will provide continuous improvements and ensure uniform adoption across our production lines. In addition, our CdTe production lines are replicas or near replicas of each other and, as a result, a process or production improvement on one line can be rapidly deployed to other production lines. We regularly produce research cells in our laboratories, some of which are tested for performance and certified by independent labs such as the National Renewable Energy Laboratory. Cell efficiency measures the pro- portion of light converted in a single solar cell at standard test conditions. Our research cells are produced using laboratory equipment and methods and are not intended to be representative of our manufacturing capability. We believe that our record cells demonstrate a potential long-term module efficiency entitlement of over 18% using our commercial scale manufacturing equipment. During 2013 we acquired GE’s global CdTe solar intellectual property portfolio, setting a course for significant advancement of our PV thin-film solar technology. The combination of the two companies’ comple- mentary technologies and First Solar’s existing manufacturing capabilities are expected to accelerate the development of CdTe solar module performance and improve efficiency at manufacturing scale. In addition, GE Global Research and First Solar R&D are collaborating on future technology development to further advance CdTe solar technology pursuant to an agreement through 2016. For information regarding our research and development expense for the years ended December 31, 2014, 2013, and 2012, See Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations.”

Customers With respect to our components business, during 2014, we sold the majority of our solar modules (not included in our systems projects) to solar power system project developers, system integrators, and operators headquartered primarily in Germany, India, and the United States, which either resell our solar modules to end- users or integrate them into solar power plants that they own, operate, or sell. Third-party module sales represented approximately 7% of our total 2014 net sales. Additionally, we develop, design, construct and sell PV solar power systems that use the solar modules we manufacture. During 2014, NextEra Energy, Inc, Southern Company and MidAmerican Energy Company individually accounted for more than 10% of our components segment’s net sales, which includes the solar modules used in our systems projects. We are investing in sustainable market development, particularly in areas with abundant solar resources and sizable electricity demand, and as part of such efforts we are seeking to develop additional customer relationships in sustainable markets and regions, which has reduced and is expected to continue to reduce our customer and geographic concentration and dependence.

Competition The renewable energy, solar energy, and solar module sectors are highly competitive and continually evolving as participants in these sectors strive to distinguish themselves within their markets and compete within the larger electric power industry. We face intense competition for sales of solar modules, which has resulted in and may continue to result in reduced margins and loss of market share. With respect to our components business, our primary sources of competition are currently crystalline silicon solar module manufacturers, as well as other thin-film module manufacturers and companies developing solar thermal and concentrated PV technologies. Certain of our existing or future competitors may be part of larger corporations that have greater financial resources and greater brand name recognition than we do and, as a result, may be better positioned to adapt to changes in the industry or the economy as a whole. Certain competitors may have direct or indirect access to sovereign capital, which could enable such competitors to operate at minimal or negative operating margins for sustained periods of time. Among PV module and cell manufacturers, the principal methods of competition include sales price per watt, conversion efficiency, reliability, warranty terms, and customer payment terms. If

16 competitors reduce module pricing to levels near or below their manufacturing costs, or are able to operate at minimal or negative operating margins for sustained periods of time, our results of operations could be adversely affected. At December 31, 2014, the global PV industry consisted of more than approximately 164 manufacturers of solar modules and cells. In the aggregate, these manufacturers have significant production capacity relative to global demand. We believe the solar industry will continue to experience periods of structural imbalance between supply and demand (i.e., where production capacity exceeds global demand), and that such periods will put pressure on pricing, which could adversely affect our results of operations. In addition, we expect to compete with future entrants to the PV industry that offer new technological solutions. We also face competition from semiconductor manufacturers and semiconductor equipment manufacturers or their customers, that produce PV cells, solar modules, or turn-key production lines. We also face competition from companies that currently offer or are developing other renewable energy technologies (including wind, hydropower, geothermal, biomass, and tidal technologies) and other power generation sources that employ conventional fossil fuels.

Raw Materials Our CdTe module manufacturing process uses approximately 30 types of raw materials and components to construct a complete solar module. One critical raw material in our production process is cadmium telluride. Of the other raw materials and components, the following eight are also critical to our manufacturing process: front glass coated with transparent conductive oxide, cadmium sulfide, photo resist, laminate material, tempered back glass, cord plate/cord plate cap, lead wire, and solar connectors. Before we use these materials and components in our manufacturing process, a supplier must undergo a rigorous qualification process. We continually evaluate new suppliers and currently are qualifying several new suppliers and materials. When possible we attempt to use suppliers that can provide a raw material supply source that is near our manufacturing locations, reducing the cost and lead times for such materials. A few of our critical materials or components are single sourced and most others are supplied by a limited number of suppliers.

CdTe Solar Module Collection and Recycling Program First Solar is committed to extended producer responsibility and takes into account the environmental impact of its products over their entire life cycle. We established the solar industry’s first comprehensive module collection and recycling program. First Solar’s module recycling process is designed to maximize the recovery of valuable materials, including the glass and encapsulated semiconductor material, for use in new modules or other new products and minimizes the environmental impacts associated with our modules at the end of their useful life. Approximately 90% of each collected First Solar module can be recycled into materials for use in new products, including new solar modules. First Solar offers recycling services to customers to help them meet these module collection and recycling obligations. First Solar’s recycling service provides plant owners with the flexibility of determining end-of life module disposition, with options that enable them to more efficiently manage their capital and improve their returns. For modules sold under sales arrangements covered under the Solar Module Collection and Recycling Program (“the program”), we include a description of our module collection and recycling obligations. For such modules covered under the program, we agree to cover the costs for the collection and recycling of solar modules, and the end-users agree to notify us, disassemble their solar power systems, package the solar modules for shipment and revert module ownership rights back to us at the end of the modules’ service lives. The European Union’s Waste Electronics and Electrical Equipment (“WEEE”) Directive places the obligation of recycling (including collection, treatment, and environmentally sound disposal) of electrical and elec- tronic equipment (“EEE”) products upon producers. The Directive is now applicable to solar PV modules in many of the EU countries. For modules covered under the program that have been sold to and installed in the EU, we continue to maintain a commitment to cover and pre-fund the estimated collection and recycling costs consistent with our historical program. However, as the detailed legal requirements of the transposed WEEE Direc- tive become known through 2015, we will prospectively adjust our offering in the various EU member states as required to ensure compliance with the local EU member state regulations.

17 For our pre-funded collection and recycling program we continue to fund the estimated collection and recycling cost incremental to amounts already pre-funded in prior years for the cumulative modules covered by the program within 90 days of the end of each fiscal year, assuming for this purpose a minimum service life of 25 years for our solar modules. In addition to achieving substantial environmental benefits, our solar module collection and recycling program may provide us the opportunity to recover certain raw materials and components for reuse in our manufacturing process. We currently have recycling facilities operating at each manufacturing facility (with sufficient capacity for manufacturing scrap, anticipated warranty returns, and modules collected at the end of their useful life over the next several years) that produce glass cullet suitable for use in the production of new glass products by a third-party supplier and unrefined semiconductor materials that will be further proc- essed by a third-party supplier and then used to produce semiconductor materials for use in new solar modules. To ensure that the pre-funded amounts for covered modules under the program are available regardless of our financial status in the future, a trust structure has been established; funds are put into custodial accounts in the name of a trustee. Only the trustee can distribute funds from the custodial accounts for qualified collection and recycling costs. These funds cannot be accessed for any purpose other than for qualified module collection and recycling costs of First Solar modules; such collection and recycling services will either be performed by us or a third-party. End users with solar modules covered by our pre-funded program can request collection and recycling of their eligible solar modules by us at any time at no additional cost.

Solar Module Warranties We provide a limited warranty against defects in materials and workmanship under normal use and service conditions for 10 years following delivery to the owners of our solar modules. We also typically warrant to our owners that solar modules installed in accordance with agreed-upon specifications will produce at least 97% of their labeled power output rating during the first year, with the warranty coverage reducing by 0.7% every year thereafter throughout the 25 year performance warranty. Prior to 2014, we typically warranted to our owners that solar modules installed in accordance with agreed-upon specifications would produce at least 90% of their labeled power output rating during the first 10 years following their installation and at least 80% of their labeled power output rating during the following 15 years. In resolving claims under both the defects and power output warranties, we have the option of either repairing or replacing the covered solar modules or, under the power output warranty, providing additional solar modules to remedy the power shortfall. We also have the option to make a payment for the then current market price for solar modules to resolve claims. Our warranties are auto- matically transferred from the original purchasers of our solar modules to subsequent purchasers upon resale. As an alternative to our module power output warranty, we have offered a system level module performance warranty for a limited number of our recent system sales. This system level module performance warranty is designed for utility scale systems and provides 25-year plant-level energy degradation protection. The system level module performance warranty typically is calculated as a percentage of a system’s expected energy production, adjusted for certain actual site conditions, with the warranted level of performance declining each year in a linear fashion, but never falling below 80% during the term of the warranty. In resolving claims under the system level module performance warranty to restore the system to warranted performance levels, we first must validate that the root cause is due to module performance; then we typically have the option of either repairing or replacing modules, providing supplemental modules or making a cash payment. Consistent with our module power output warranty, when we elect to satisfy a valid warranty claim by providing replacement or supplement modules under the system level module performance warranty, we do not have any obligation to pay for the labor to remove or install modules. Currently, a majority of our systems projects are subject to such system level module performance warranty, and we expect that this percentage will increase in the future as we extend it to future systems sales arrangements. We do not anticipate that the system level module performance warranty will have a material impact on our future warranty claim rates, as such warranty is designed to be in line with the expected risk-adjusted aggregate performance of our modules. The offering of such system level warranty addresses the challenge of identifying, from the potential millions of modules installed in a utility scale system, individual modules that are performing below warranty by focusing on the energy generated by the system rather than the capacity of individual modules.

18 From time to time we have taken remediation actions with respect to affected modules beyond our limited warranty, and we may elect to do so in the future, in which case we would incur additional expenses. Such potential voluntary future remediation actions beyond our limited warranty obligation could have a material adverse effect on our results of operations if we commit to any such remediation actions.

Systems Business Through our fully integrated systems business, we provide a complete turn-key solar power system solution or any combination of our systems solutions, which may include project development, EPC services, O&M services, and project finance. Our systems business has grown over the past several years through a combination of business acquisitions and organic growth. In January 2013, we acquired Solar Chile, a Santiago-based solar development company. Solar Chile has a portfolio of utility-scale PV power projects in varying stages of development currently totaling approximately 1 GW in northern Chile, including the Atacama Desert region, which offers the highest solar irradiance in the world. In addition, in August 2013, we acquired a pipeline of U.S. and Mexico development assets from Element Power. Included in the 1.5 GW pipeline are diverse projects in various stages of development in California, Arizona, Texas, Georgia, North Carolina, Colorado, Louisiana, Illinois and Mexico.

Project Development Project development activities include: site selection and securing rights to acquire or use the site, obtaining in a timely manner the requisite interconnection and transmission studies, executing an interconnection agreement, obtaining environmental and land use permits, maintaining effective site control, and entering into a PPA with an off-taker of the power to be generated by the project. These activities culminate in receiving the right to construct and operate a solar power system. Depending on the market opportunity or geographic location, we may acquire projects in various stages of development or acquire project companies from developers in order to complete the development process, construct a PV power plant incorporating our modules and sell the system to a long-term project owner, or in certain cases, operate the system on our own. Depending on the market opportunity or geographic location, we may collaborate with local partners in connection with these project development activities. Depending on the type of project or geographic location, PPAs or FiT structures define the price and terms the utility customer or investor will pay for power produced from a project. Entering into a PPA gen- erally provides the underlying economics needed to finalize development including permitting, beginning construction, arranging financing, and marketing the project for sale to a long-term project owner. Depending primarily on the location, stage of development upon our acquisition of the project, and other site attributes, the development cycle typically ranges from one to five years. We may be required to incur significant costs for pre- liminary engineering, permitting, legal, and other expenses before we can determine whether a project is feasible, economically attractive, or capable of being built. If there is a delay in obtaining any required regulatory appro- vals, we may be forced to incur additional costs, write-down capitalized project assets, and the right of the off- taker under the PPA to terminate may be triggered.

Customers With respect to our systems business, our customers consist of investor owned utilities, independent power developers and producers, commercial and industrial companies, and other system owners who may purchase from us completed solar power plants (which include our solar modules), any combination of EPC services, and O&M services for the plants we build. During 2014, the substantial majority of our systems business sales were generated in North America. During 2014, the principal customers of our systems segment were Southern Company, NextEra Energy, Inc, and MidAmerican Energy Company, each of which also accounted for more than 10% of our systems segment net sales during 2014.

Competition With respect to our systems business, we face competition from other providers of renewable energy solutions, including developers of PV, solar thermal and concentrated solar power systems, and developers of other

19 forms of renewable energy projects, including wind, hydropower, geothermal, biomass, and tidal projects. To the extent other solar module manufacturers become more vertically integrated, we expect to face increased competition from such companies as well. We also face competition from other EPC companies and joint venture type arrangements between EPC companies and solar companies. Certain current or potential future competitors may also have a low cost of capital and/or access to foreign capital. While the decline in PV modules prices over the last several years has increased interest in solar electricity worldwide, there are limited barriers of entry in many parts of the PV solar value chain, depending on the geographic market. Accordingly, competition at the systems level can be intense, thereby exerting downward pressure on systems level profit margins industry-wide, to the extent competitors are willing and able to bid aggressively low prices for new projects and PPAs, using low cost assumptions for modules, BoS components, installation, maintenance and other costs. Please see Item 1A: “Risk Factors — Competition at the systems level can be intense, depending on the market opportunity, thereby poten- tially exerting downward pressure on systems level profit margins industry-wide, which could reduce our net sales, profitability and adversely affect our results of operations.”

EPC Warranty In addition to our solar module warranties described above, for solar power plants built by our systems business, we typically provide a limited warranty on the balance of the system against defects in engineering design, installation, and workmanship for a period of one to two years following the substantial completion of a phase or the entire solar power plant. In resolving claims under the engineering design, installation, and workmanship warranties, we have the option of remedying the defect through repair, or replacement. As part of our systems business, we conduct performance testing of the solar power plant prior to substantial completion to confirm the power plant meets operational and capacity expectations noted in the EPC agreement. In addition, we may provide an energy generation performance test during the first year of the solar power plant’s operation. Such a test is designed to demonstrate that the actual energy generation for the first year meets or exceeds the modeled energy expectation, after certain adjustments and exclusions. If there is an under- performance event, determined at the end of the first year after substantial completion, we may incur liquidated damages as a percentage of the EPC contract price. In some instances, a bonus payment may be received at the end of the first year if the power plant performs above a certain level. In limited cases, a similar energy generation test is offered as part of our operations and maintenance service, up to a maximum of five years. In such a case, liquidated damages are incurred at the lost energy price noted in the PPA.

Research, Development, and Engineering Our systems business research and development activities are primarily focused on the objective of lowering the LCOE through reductions in BoS costs, improved systems design, and energy yield enhancements associated with PV systems that use our solar modules. These R&D efforts are also focused on continuing to improve our systems in terms of grid stabilization. We conduct our research and development activities for the systems business primarily in the United States. Innovations related to system design, hardware platforms, inverters, trackers, and installation techniques and know how, among other things, can and are expected in the future to continue to reduce BoS costs, which can represent a significant portion of the costs associated with the construction of a typical utility-scale PV solar power system. For information regarding our research and development expense for the years ended December 31, 2014, 2013, and 2012, See Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations.”

Own and Operate From time to time we may temporarily own and operate certain PV solar power systems while we attempt to market them. The ability to do so allows us to gain control of the sales process, provide a lower risk profile to a future buyer of a system, and improve our ability to drive higher eventual sale values. As of February 2015, we owned (or have ownership interests in) and operated three solar power plants. As an owner and operator of these PV solar power systems, we and certain of our operating subsidiaries are subject to the authority of the Federal Energy Regulatory Commission (“FERC”), as well as various other local, state and federal regulatory bodies. For

20 more information about risks related to owning and operating PV solar power systems, please see Item 1A: “Risk Factors — As a temporary owner and operator of certain PV solar systems that are delivering electricity to the grid, certain of our indirect subsidiaries are regulated as a public utility under U.S. federal and state law, which could adversely affect the cost of doing business and limit our growth.” For more information about the economics of such ownership and the impacts on our liquidity See Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

Intellectual Property Our success depends, in part, on our ability to maintain and protect our proprietary technology and to conduct our business without infringing on the proprietary rights of others. We rely primarily on a combination of patents, trademarks and trade secrets, as well as associate and third-party confidentiality agreements, to safeguard our intellectual property. We regularly file patent applications to protect inventions arising from our research and development, and are currently pursuing patent applications in the U.S. and worldwide. Our patent applications and any future patent applications might not result in a patent being issued with the scope of the claims we seek, or at all, and any patents we may receive may be challenged, invalidated, or declared unenforceable. In addition, we have registered and/or have applied to register, trademarks and service marks in the U.S. and a number of foreign countries for “First Solar” and “First Solar and Design.” With respect to proprietary know-how that is not patentable and processes for which patents are difficult to enforce, we rely on, among other things, trade secret protection and confidentiality agreements to safeguard our interests. We believe that many elements of our PV module manufacturing process, including our unique materials sourcing, involve proprietary know-how, technology, or data that are not covered by patents or patent applications, including technical processes, equipment designs, algorithms, and procedures. We have taken security measures to protect these elements. Our research and development personnel have entered into confidentiality and proprietary information agreements with us. These agreements address intellectual property protection issues and require our associates to assign to us all of the inventions, designs, and technologies they develop during the course of employment with us. We also require our customers and business partners to enter into confidentiality agreements before we disclose any sensitive aspects of our modules, technology, or business plans. We have not been subject to any material intellectual property infringement or misappropriation claims.

Environmental, Health, and Safety Matters Our operations include the use, handling, storage, transportation, generation, and disposal of hazardous materials and hazardous wastes. We are subject to various national, state, local, and international laws and regulations relating to the protection of the environment, including those governing the discharge of pollutants into the air and water, the use, management, and disposal of hazardous materials and wastes, occupational health and safety, and the cleanup of contaminated sites. Therefore, we could incur substantial costs, including cleanup costs, fines, and civil or criminal sanctions and costs arising from third-party property damage or personal injury claims as a result of violations of, or liabilities under, environmental and occupational health and safety laws and regulations or non-compliance with environmental permits required for our operations. We believe we are currently in substantial compliance with applicable environmental and occupational health and safety requirements and do not expect to incur material expenditures for environmental and occupational health and safety controls in the foreseeable future. However, future developments such as the implementation of new, more stringent laws and regulations, more aggressive enforcement policies, or the discovery of unknown environmental conditions may require expenditures that could have a material adverse effect on our business, results of operations, or financial condition. See Item 1A: “Risk Factors — Environmental obligations and liabilities could have a substantial negative impact on our financial condition, cash flows, and profitability.”

Corporate History In February 2006 we were incorporated as a Delaware corporation. Our common stock has been listed on The NASDAQ Global Select Market under the symbol “FSLR” since our initial public offering in November 2006. In October 2009, our common stock was added to the S&P 500 Index, making First Solar the first, and currently only, pure-play renewable energy company in the index.

21 Associates As of December 31, 2014, we had approximately 6,060 associates (our term for full and part-time employees), including approximately 4,320 in module manufacturing positions and approximately 550 associates that work directly in our systems business. The remainder of our associates are in research and development, sales and marketing, and general and administrative positions. None of our associates are currently represented by labor unions or covered by a collective bargaining agreement. As we expand domestically and internationally, however, we may encounter either regional laws that mandate union representation or associates who desire union representation or a collective bargaining agreement. We believe that our relations with our associates are good.

Information About Geographic Areas We have significant marketing, distribution, and manufacturing operations both within and outside the United States. Currently, we manufacture our solar modules at our Perrysburg, Ohio, and Kulim, Malaysia manufacturing facilities. In 2014, the foreign country with the greatest concentration risk was Australia, which accounted for 5% of our consolidated net sales. As part of our Long Term S